REA Group Limited (REA) Earnings Call Transcript

Welcome you to our 2026 Annual General Meeting. Before we commence, I'd like to acknowledge the traditional owners of country throughout Australia and recognize their continuing connection to land, waters and communities. We pay our respect to Aboriginal and Torres Strait Islander cultures and to the elders past and present. There is a quorum present, I declare the meeting open, and the notice of meeting is taken as read. I'd now like to cover the meeting procedures and that and what we'll be using today. Voting will be conducted by poll. Shareholders had the option of casting their votes before the vote online, as shown on the slide now being displayed and as explained in further detail on the online meeting guide that accompanied the notice of meeting. You can do so at any time during the meeting as the poll is now open for voting. Voting will close shortly at the end of the meeting. To help with the comments now. Further details on how to ask questions or to make a comment and online are contained in the online meeting guide. If you encounter any technical issues of the platform need time during the meeting, please contact the share registry's online AGM support team on 1800990363. Meeting as planned, REA will make announcements via the ASX and our website. As set out in the notice of meeting, only shareholders and proxy holders are entitled to vote on the resolutions, ,ask questions or make comments. I will allow a reasonable opportunity to address questions and comments as each item business is considered. Please ensure that your question or comment is relevant to an item of business at this meeting or to the management of the company. Shareholders will also be able to ask questions of the company's auditor. Questions relating to customer consumer observe a 2-question limit per item of business and keep questions short and focus to ensure as many shareholders as possible have an opportunity to ask questions. Where questions are similar, we will acknowledge those who have asked the question, but we'll provide a single response in order to streamline today's proceedings. Questions or comments which do not relate to REA will not be acknowledged or addressed during the AGM. Tracy Fellows, Richard Freddestin, Michael Miller, Jennifer Lambert and Nick Dowling and our CEO, Cameron McIntyre. Also in attendance is our company Secretary, Tamara Kayser as well as Alison Parker representing the company's auditors, Ernst & Young. In June, we announced Kelly will retire as a Director of REA after nearly 5 years of service on behalf of. That's in the future. Thank you. Kelly. I would also like to take this opportunity to welcome Sally Bruce to the REA Group board. Sally's deep experience across financial services will be particularly valuable while her breadth of skills and experience will serve to complement and strengthen the Board. Sally will commence in November. Turning to our agenda for today's meeting. Firstly, I'll provide a brief overview of REA's FY '26 strategic highlights. Cam will then talk to our FY '26 financial and operational performance, and we will share a brief update on current market conditions. In accordance with the notice of meeting, we will then move to the formalities. Under the leadership of Cameron and his executive team, REA Group delivered an excellent financial result with strong yield growth. The group's performance demonstrates the ongoing strength in the core business. It also reflects a that we have with our agent partners. The chart on this slide demonstrates the significant growth in the group's revenue and earnings with innovation at our by our strong 10-year CAGR of has outperformed the ASX 200. And today, our focus on delivering consistent long-term growth and strong shareholder returns. This support remains absolutely clear. In FY '26, our share price reflected market caution around AI, which we saw play out globally, combined with more challenging property market conditions in Australia following consecutive interest rate rises combined with tax policy impacts and uncertainty. In addition to the strength of our operational execution and financial performance, we continued to invest in future growth in FY '26 with key acquisitions and strategic investments. Supporting our immersive consumer strategy, the group announced a 61.5% acquisition of Canadian-based Planeta Inc., the maker of visualization platform immersive and acquired a minority stake in property due diligence marketplace before you buy, bolstering community data and insights for consumers. The group also acquired Australian a strong platform or foundation of our Financial Services business. In late FY '26, REA acquired 70% of Simplicity, a boutique brokerage with a team of finance specialists focusing on commercial listings. In July 2026, we announced the sale of the remaining REA India business, Housing.com India increased its holding in or to 24.9%. Arm has a strong capability and strong local market published. Last week, we were pleased to announce that REA has agreed to acquire a 35 place operator in Ireland and Northern Ireland, distilled operates a portfolio of #1 portals in. Ireland's leading residential property portal. The proposed investment represents a strategically compelling transaction for REA and its shareholders with a disciplined entry into an attractive high-growth market. The investment is subject to regulatory approvals and is expected to complete before the end of the calendar year 2026. And finally, the Board and I were delighted to welcome Cameron McIntyre to the CEO role in November, Cam's wealth of experience lead the business and to deliver an excellent FY '26 performance. We were also pleased to announce Andrew Cramer to the CFO role in February. This was a seamless transition into our business after Andrew 7 years at News Corp in New York. In closing, I would like to thank the group's Board members for their dedication to the business. I would also like to thank our employees for their commitment to REA's continued success and to extend my thanks to our valued customers for their support. REA has a strong balance sheet and a dedicated talented team with a focus on continued innovation we embrace the opportunities AI presents. The group is well placed for continued growth. I'll now hand over to Cam, who will talk through our FY '26 financial and operational performance and to provide an update on current market conditions. Welcome, Cam.

Thank you Thanks, Hamish, again, and good morning, everyone. Look, as Hamish mentioned, REA delivered an excellent performance underpinned by double-digit yield growth in FY '26. Our unparalleled audience and proprietary is for our customers, consumers and brokers. The Australian property market became more favorable to buyers in the first -- or in the last quarter as national house price growth started to moderate despite proposed federal tax changes, global events and interest rate increases affecting the overall sentiment. Vendors continue to bring properties to market and national listing volumes remain and in line with prior year. Thank you. We evolved our well-established strategy as well during the year, and we enter this next chapter of growth from a position of strength. Our strategy for the years ahead, builds on the success of the past 3 decades and sharpens our focus on unlocking new sources of growth. Our purpose as a business remains clear, and that's to change the way the world experiences property. And as technology, data and AI transform the industry, we see significant opportunity to deliver even more value for our consumers -- this is our evolving landscape, putting trust at the core, underpinned by our strength in deep relationships, unparalleled data and better outcomes for our stakeholders. And we're focused now on 3 enterprise-wide missions to now reinvent property experiences to scale our growth engines. Just looking at some financial data here and group results for core operations during the year saw revenue grow by 7% on the corresponding period, or PCP, up to $1.79 billion to $1.09 billion and NPAT was up 15% to $650 million. The Board also determined to pay a final dividend of $1.73 per share Together with the interim dividend, this represents a total dividend payment of $2.97 per share fully franked, an increase of $20 side our operating performance, we maintained a disciplined approach to cost and capital management. We improved our operational efficiency we returned capital to shareholders through our $200 million share buyback, reflecting the financial strength that we have as a business and the confidence we also have as well. Look, in FY '26, more people than ever visited our flagship site, and we recorded an average of 12.7 million people each month coming to realestate.com.au. That's a $5.2 million more than our nearest competitor. Our real value in our large scale audience has continued to grow, and key engagement metrics have also strengthened. The quality of realestate.com. Consumers spend more time on our platform than any other property site and 9 out of 10 Australians who visited any residential property site visited realestate.com.au. The size of our audience and our data fuel our artificial intelligence experiences and firmly position REA as a leading beneficiary in the world of AI. REA has the largest, most engaged property audience in Australia, a unique consumer intent and behavioral data that feeds into each of our proprietary data sets is highlighted on this slide. Everyone can see our listings, but on the REA can and behavior, rich property records the deepest listing and transaction outcomes, the most comprehensive agent and affordability data. Just turning to some of the -- our new AI-powered features include immersive experiences plus rich data and new content enhanced the membership experience in FY '26 and supported the 14% growth in our membership base on PCP, powered by a proprietary data, the new AI system experience. You can see on the slide there, enables members to ask anything about property during their search, consumers can discover properties, check affordability, evaluate, compare and take action. More valuable for support to deliver more leads to our customers. property seekers are increasingly taking more immersive and informative search experiences. Our visualization strategy is designed to deeply engage consumers in our content. The upload of iGuide 3D tours is accelerating, and we have about 180 cameras as at 30 experience with 0 or near load time for onto our platform. To recognize the value of our premium products, and we achieved record Premier Plus penetration in FY '26. The video hub on our app screen now includes listing videos, and this is a powerful and high exposure engagement feature. But Premier Plus and Lux Listings and was a key component in our FY '27. Combines consumer intent and PropTrack-powered AVM data to provide customers with strategic recommendations to boost their performance and boost the performance of a listing. Enhanced brand exposure and access to exclusive products and tools underpin the value of our top-tier Pro subscription. Agency groups continue to recognize this with several customer groups signing enterprise-wide pro agreements with us. Underpinning the value for all of our customers is access to the our IGNITE platform and we're also pleased to see active -- so look, our commercial platform also record audiences with 2.9 million Australians visiting aging content supported audience growth, including points of interest on maps and guide. Our top-tier commercial product, achieved record penetration. Customers are recognized the increasing value of this with Ignite. Product innovation and brand investment supported good revenue growth in our Financial Services business as well. Enhancements leads to mortgage choice brokers and with settlements up 30% -- or sorry, leads and settlements up, but leads were up 30% on PCP. We also saw continued investment in our core with 50% of our brokers now are using AI agents to efficiently automate processes. Our REA Group is committed to sustainable business practices as well, and we're pleased to make progress towards our sustainability goals in FY '26. Our efforts were recognized with consistent MSCI ESG rating of AAA in a bit -- we -- in FY '26, launched a home for all foundation. And in its inaugural year, the foundation raised $1 million of funds, which were distributed to 4 organization. REA's people are at the heart of our organization, and we're committed to fostering a diverse and high-performance culture, and we will place to work, and we also achieved a strong employee engagement score of 85%. Now before we move to the -- some of the formalities, I just wanted to touch briefly on just a couple of market condition updates. So I mean interest rates are the biggest factor contributing to a along with tax changes and the cumulative impact of higher borrowing costs on buyer demand at the moment. However, resilient employment limited force selling and homeowner equity buffers along with the ongoing constrained supply should put a floor in price falls as we see. As interest rates stabilize in the coming months, we expect consumer confidence to improve and buyer activity to also pick up. Just looking at listing volumes as well. So Melbourne and Sydney led new listing volumes with smaller capital cities offsetting quieter conditions in Sydney and Melbourne in Q1 and by 27. National new listings were down 2% in Q1 on PCP, which is in line with the guidance that we gave in our full year results. Despite this decline, listings remain comparable -- it's our first quarter financial results in November. And as Hamish mentioned, in closing, I just want to thank some -- the executive teams as a whole for the commitment they have had Andrew Cramer and Katrina Consus to the business over the last several months. So for Andrew, the new CFO and Cat, the new Chief Commercial and Marketing Officer. Also, Jonathan Swift recently former Chief Marketing and Commercial Officer. And I just like to thank Karl for his contribution over the last 11 years. Also, I'd like to express my thanks to you, Hamish, and to the Board of Directors for your ongoing counsel and support throughout my first year in the business. And contribution and partnership over the last 12 months is a balance sheet, strong product pipeline, sustained strength in core business and really talented team to do an excellent job. And with that, I'll hand it back to Hamish.

I will now proceed with the formal today, and the items of business are now being shown on the screen. During the meeting, we will get to each item, we will display the proxy votes and the direct votes received in advance of the meeting in respect to that item. As indicated in the notice of the meeting where I, as Chairman of to vote undirected proxies in favor of the resolution to the extent permitted and will vote directed proxies in accordance with the instructions given by the shareholder. There are also a which apply to those that have an interest in the resolutions and certain of their related parties or associates. I remind you that the online polls are now open for voting. Online voting will close 5 minutes after the conclusion of the AGM. Matalan of MUFG corporate markets -- right as returning Officer. Item 1, I will now table the 2026 Annual Financial Report, including the sustainability for the meeting to consider. There is no formal resolution put to shareholders on this item, but there will be an opportunity to ask questions on the matters contained within the report. I will now turn to any written questions received during the course of today's meeting.

Thank you, Chairman. We have not received any questions on this item of business. .

Thank you I will now turn to any audio questions. Operator, do we have any questions on this item of business? There are no questions via the front lines. Okay. As there are no questions, I will now move to item 2. The first resolution today concerns the adoption of the remuneration report, which is set out in up is 2026 annual report. I remind you that the vote on this item is advisory only, and we will consider and take into account the vote and feedback from shareholders on the remuneration report. The Board recommends that shareholders vote in favor of this resolution is set out on the screen. I note that the proxy and direct votes -- so prior to the meeting in respect to this item of business are now set out on the screen. I will now turn to any written questions received during the course of today's meeting.

Thank you, Chairman. First question is from Stephen Maine. When serving as Car Group CEO, Cam McIntire was involved in the call to embrace early disclosure of the proxies to the ASX well ahead of the AGM kickoff. Sadly, REA has maintained its practice withholding proxy disclosure and a stripped the proxy data from the formal presentation slides lodged with the ASX. Did the Board even discuss early disclosure, emulating Car Group's best practice? And if not, will you undertake to look into embracing that practice at next year's AGM? Also, were there any protests matters.

So we do review our process. So we do discuss it. said that. Your question is noted, and then we will review it in my with our planning for next year.

Remuneration report rates delivery of the FY '26 India strategy has met despite the impairment and subsequent sale announcement. How did the Board distinguish successful execution of the exit strategy from accountability for the original investment losses and what effect this assessment and transaction-related incentive adjustments have on executive bonuses.

Nick, do you want to take that?

Yes, sure. Thank you, Hamish. Thanks for the question. So those strategic items and outcomes make up a large proportion of the individual component of the -- it relates to India, we're talking about the current management team here and the task that the Board set was for the fresh set of eyes to review the current strategy and options that we have. And given the outcome that have entered, it certainly met our expectations in that regard. And also noting that we continue to hold a position in India through or that we see -- further recent questions.

Thank you. I will now turn to the audio questions. Operator, do we have any questions on this auto business.

Chairman, there are no questions via the phone lines.

We will now proceed to the vote on resolution 2, which you please now vote using the voting card on the online -- thank I'll now move on to item 3. Executive Director of the company in May 2018. He retires by rotation and being eligible is today standing for reelection as a director. Mr. Darling's details are set out on the notice the meeting. The Board, other than Mr. Dowling unanimously support his -- we'll now hear from Mr. Dowling through a short address.

Thank you, Hamish, and good morning, everyone. 3 terms, I feel that I've made a solid and important contribution to the company. As the Chairman and previously the CEO of 1 of the largest real estate groups in Australia. I bring -- this provides a constant and clear change as to how the customer from a group of feeling and connecting with the company, plus insights into the competitive dynamics and how the industry and marketing of property are evolving. Prior to my time in the real estate industry, I spent 15 years in the Australian banking industry, and that experience has given me the opportunity to contribute to our financial really during my time with REA I've contributed to the broader strategy and direction, such as our data strategy and our international businesses. For the past 5 years, I've also chaired the Human Resources Committee role that I've enjoyed and insisting and I feel that I have consistently demonstrated the ability to act independently. So with that said, I offer myself for reelection to the Board of REA.

Thank you, Mick. I move that Nick Dowling be reelected as a Director of the company. I'm over at the proxy and direct votes received prior to the meeting in respect to this item of business. turning the call to today's mating. Erin?

Thank you, Chairman. We have received 2 written questions on this item of business. The first question is from Stephen Van Emerick. Given Mr. Dalin's role as Chairman of Jellis Craig, how does the Board manage actual or perceived conflicts? Economics and what supports its conclusion that he remains an independent director. .

Nick beyond his role at Calos Craig is an experienced businessman came out of banking. All work that's done between REA and Jules Craig's arm's length and they get no preferential treatment whatsoever. Nick is a voice and 1 of many voices around the boardroom that gives insight into the nature of the industry. And more than anything, actually is there as a voice of support for our very valued agent customers. So he acts independently. His ethics are of the highest standard is transparent, and he does a great job, not only for the industry, but for REA as well. Thank you. Erin, other -- any other questions.

Could Nick Dowling comment on how involved the News Corp nominee directors were in the process to select Sally Bruce as the newest Independent Director to represent non-News Corp shareholders on the Board. Also, which recruitment firm assisted with the search, how many other candidates were interviewed by multiple directors and to Nick or any of the other directors or KMP, no sally before she engaged with the recruitment process.

Nick, do you want to take that?

Yes. Thank you. I'll answer the part of the question, the data relevant. So we did use a professional recruitment as we have in the past. That process is led by the -- we worked through a very long list and the HR Committee with some assistance from our chair that down towards a short list. There were quite a number of directors involved in those interviews. So as Hamish alluded to earlier, we're very pleased with Sally Bruce joining the business. We're really confident she's going to bring a lot of value to the future of REA.

Thank you, Chairman. We have received 1 additional question from Stephen Maine. Is this NC last term? And why is he serving a fourth term when Kelly has exited after just 5 years? Also, can you cite any examples of taking on the News Corp directors on behalf of the independent shareholders he represents.

As you know, think that's been a competitive advantage against all of our competitors. And so that knowledge built up over the years is really critical to our success. So Nick has performed outstanding. They've stayed for more than 10 years. And again, in the spirit of wanting continuity in that knowledge. And what Nick has delivered. We're very happy for him to continue for long as he likes, but he will in the course of his career and his time at the company will be up for reelection in due course. And again, he's got to decide if he wants to continue, but we love his input and support. On the matter as it relates to Kelly. Kelly has been a fantastic contributor to the company. But Kelly has a full-time job. It was Kelly's decision. We would love Kelly to multiple interest outside of REA, and we respect that decision. And again, we all remain great friends, and we thank Kelly again for her fantastic contribution to the company. Erin, any more questions?

Chairman, there are no further recent questions.

Are there any other audio questions from the operator? -- to Item 4 of the agenda. We now move to the resolution concerning the grant of performance rights to the CEO, Cameron McIntyre. Under the 2021 REA Group long-term incentive plan. Details of the proposed grant are set out in the notice of meeting. If the performance rights vest and Mr. McIntyre comes entitled to be allocated shares under the LTM, all such shares will be purchased on market by the company and transfer to Mr. McIntyre. Accordingly, the granted performance rights and allocation of shares on vesting of those performance rights to Mr. McIntyre does not require shareholder approval under ASX listing Rule 10.14. The Board is nevertheless voluntarily seeking shareholder approval and recognition of the importance of shareholder engagement on the as of the 30th of June 2029 will be determined by reference to revenue, earnings per share and relative total shareholder return performance conditions. In respect of Asia performance condition, the nonexecutive direct set out on the screen. I note that the proxy and direct votes received prior to the meeting in respect to that item business is set out on the screen. I'll now turn to any written questions received during the course of today's meeting. Erin?

Thank you, Chairman. We have received 2 written questions on this item of business. The first question is from Stephen Van Emerick. The ASA prefers remuneration that is linked to shareholder experience, i.e. the use of total shareholder return is a hurdle REA does not follow this practice, and this results in executives being rewarded even as the share price decreases. You are asking shareholders to sign a blank check here. with 75% of the proposed award linked to undisclosed EPS and revenue growth hurdles, how can shareholders the growth from acquisitions buyback?

Nick, do you want to take that?

Yes. Thank you. So this question is pointing to the long-term incentive structure, which is made up of an EPS component, a revenue component and it does have a total shareholder return component in there at 25%. So the share price movement is taken into account in that. If you look at the 3-year period, it's just concluded the revenue and EPS components performed quite strongly yet it was a drag down somewhat by the share performance, particularly over the last 12 months. I can also provide assurance that there's only reward for genuine growth. All the committee feels is appropriate. And we certainly adjust as we always have for any M&A. So there are no free kicks if we make an acquisition as an example -- thank you.